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Tiffany Messed Up During Covid-19, LVMH Says
Sep 10, 2020 10:38 AM
By Rapaport News
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RAPAPORT... LVMH plans to countersue Tiffany & Co. after the companies’ $16 billion marriage turned sour, accusing the US jeweler of management errors during the coronavirus.
“[Tiffany’s] first-half results and its perspectives for 2020 are very disappointing, and significantly inferior to those of comparable brands of the LVMH group during this period,” LVMH said Thursday. “LVMH will be therefore led to challenge the handling of the crisis by Tiffany’s management and its board of directors.”
The crisis constitutes a “material adverse effect” that allows LVMH to renege on the deal, the luxury giant argued. Tiffany also made unusual decisions during the period, such as distributing substantial dividend despite incurring losses, it continued.
“The operation and organization of this company are not substantially intact,” LVMH claimed.
LVMH pulled out of its takeover of Tiffany on Wednesday, citing a Franco-American trade dispute. Tiffany then sued its former suitor in Delaware to force it to go ahead with the deal — an action the French group described as “unfounded” and “defamatory.”
Tiffany’s core claim was that LVMH had stalled the transaction by intentionally delaying applications for antitrust clearance, seemingly so it could buy time to renegotiate the price in light of the pandemic.
But LVMH said it could demonstrate to the court that this was incorrect, and noted that it would file for antitrust approval in Brussels in the coming days. It expects to obtain clearance in October, it added.
Tiffany’s sales fell 29% year on year to $747.1 million in the second fiscal quarter ending July 3, while net earnings dropped 77% to $31.9 million. The retailer recorded a first-quarter loss.
Image: The Tiffany flagship store in New York. (Shutterstock)
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Tags:
Coronavirus, LVMH, Rapaport News, Tiffany, Tiffany & CO.
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